Unpaid salaries as threat to pension scheme

UNPAID salaries may not be a new phenomenon in the country as workers have got used to being owed several months by both the private and public sectors.

If this has been the scenario for several decades, why then the cacophonies of hullaballoos that have greeted several months of unpaid salaries of workers by state governments?

Indeed, this anxiety may not be unconnected to the popular maxim of ‘who watches the watchdogs’. If government that should ensure private sector pays salaries, in turn owe salaries running into several months and the ability to pay, is even more remote, then the country is indeed mired in an intractable financial trouble.

It has indeed been proven that governments in every parts of the world is the largest singular employer of labour, hence, its inability to pay its workforce brings with it, dire consequences of the highest magnitude.

While the workers face the immediate consequence of not being able to meet their obligation, pensioners face greater challenge as they are confronted by survival challenge without anywhere to turn to. Of greater danger is that the futures of the current workers are jeopardized.

It is understatement to say that the pension funds under the administration of the National Pension Commission (Pencom) is under a formidable threat as the Pension Funds Administrators (PFAs) are under more pressure to ensure remittance of pension funds because salaries are not paid.

Putting the danger of non-payment of salaries by state governments succinctly, the Director General of Nigeria Employers Consultative Association (NECA), Segun Oshinowo, identified erosion of consumer expenditure as a potential danger for the economy.

His words: “Workers’ salary poses danger to the economy at large and not just danger to the survival of the pension sector. Salaries are a key driver of growth. Indeed, one of the key components that drive growth is consumer expenditure. Now, if workers are not paid, it is going to affect consumer expenditure component that drive growth. Unpaid salaries would affect industries and worsen employment situation. So, effects of unpaid workers’ salaries go well beyond the surface of just not paying the workers, we are toiling with the potential for our economy to grow. The United States economy for instance, 75% of the growth there is driven by consumer expenditure. The United States government understands that pretty well and will therefore not make the mistake of not paying workers decent salaries and not paying regularly.”

Oshinowo also took a swipe at creation of states on the altar of political exigencies rather than economic consideration.

“I think the issue we have at hand is far more fundamental than states navigating ways to sustain paying their staffers, I think should worry us is to ask the question about what informed the creation of those states in the first place? If we were able to provide answers to this question, then the agitation for state creation would fizzle out naturally. Why should any state that cannot sustain itself through internally generated revenue want to continue to exist? May be we should be looking at those states to see the option of merging them with a view to making them stronger economically on the basis of economic viability,” he explained.
Oshinowo also cautioned state governments that may be considering reduction of their staff strength saying, “ordinarily, exploring the option of reducing the workforce should be an option. But we should realize that government does not look at employment or the size of its workforce purely from an economic side, social considerations are a key component in decision-making process concerning workforce. This is because governments everywhere see themselves as providers of jobs and it should lead by example by making opportunities available for the citizens.”

On his part, the immediate past President of Trade Union Congress (TUC), Peter Esele, decried bad example set by the defaulting state executives.

He described the state governments as irresponsible who shamelessly abandoned their responsibilities to the people they govern.

He added” “It is particularly worrying that a government that makes laws compelling employers to pay salaries is itself going against such laws. I think that there is a course to be worries as Nigerians to the growing irresponsibility of state government defaulting in paying workers salaries for months. Will labour unions or workers in the private sector have any justification to complain to government for unpaid salaries by employers in the private sector?”

Esele also decried the prevailing national culture and practice that encourage those in government to satisfy every segments of the society.

He explained: “Nigerians need to change their values and orientation. For example, there are too many people involved in the governance process where a single government official has retinue of aides that are largely jobless all in the name of ‘local empowerment’ to stakeholders. The amount of money spent to maintain all these aides is more than enough to pay workers’ salaries.”
While opposing the downsizing of the workforce at the state level, the immediate past President of Trade Union Congress (TUC), called for what he termed ‘downsizing of the states’ into unit of government that is empowered enough to meet its obligations to the citizenry through resources that are internally generated.

“Let us face it, most of the states we have in Nigeria are not economically viable. We should be thinking of downsizing the political offices. That is the bitter truth. There is no way all the states can survive on their own without handout from the Federal Government. That is why Nigeria does not have savings for the raining day. Everything we have today is spent on running cost of government. Nigeria comes last among oil producing countries that has the least figure in its sovereign wealth fund. Now, we are running helter-skelter because the price of oil is low. What did we do with it when the price was high? We simply ‘shared’ the money while other countries are saving or investing their excess resources to generate more money for their future generations. It was laughable when the defunct national conference recommended the creation of more states. Though I was part of the minority group that opposed the recommendation, it showed that we are not ready to solve our problems genuinely. It is the ‘sharing mentality’ that encourages the urge for the creation of more states. I do wish that the price of oil will keep dropping even below 40 dollars if that will allow us think as a country,” he submitted.